Latest Rail News

22.08.14

Rail subsidies down nearly 40% in five years

Over the last five years rail subsidies have fallen nearly 40%, new figures from the Department for Transport (DfT) have revealed.

During 2013-14, the government paid rail companies 6.8p per passenger mile, down 39% compared to 2009-10 when operators were paid 11.1p a mile. The latest figure was also down 6.8% from 7.3p per passenger mile in 2012-13.

However, the level of subsidies is widespread with regional variations. For instance, Northern Rail, which operates in the North West, the North East and Yorkshire and Humberside, was paid 51.5p per passenger mile. This was the highest figure, compared to First Capital Connect (FCC) where the government made a profit of 3.9p per passenger mile, from the premiums paid by the operator.

In total during 2013-14, three train operators had a negative subsidy per passenger mile, meaning that they paid government a larger premium than the effective subsidies they received. These operators included the aforementioned FCC, South West Trains and East Coast.

A DfT spokesperson said: “Passenger numbers are at record high levels and this growth is expected to continue. This is why over the next five years more than £38bn will be spent on the railways to increase the capacity and quality of the network.

“The UK government provided more than £2bn of net subsidy in 2013-14, helping keep trains running right across the country. We recognise the impact of travel costs on family budgets, which is why we reduced average regulated fare rises to RPI plus 0% this year for the first time in a decade.”

The government’s long-term strategy on rail pricing has been to shift the burden away from taxpayers and onto fare-paying passengers.

However, Mick Cash, acting general secretary of the RMT union, said that whichever way these numbers are “spun”, they show that rail franchising is a “one-way ticket to the bank for the private train companies”.

He added: “With another windfall heading their way from the inflation-busting rise in fares, it is no wonder that the British people are sick of these scroungers and parasites milking our railways for their own benefit.”

Earlier this week, the release of July’s inflation figures from the Office for National Statistics, it was revealed that regulated rail fares are set to increase by an average 3.5% from January 2015.

A spokesperson for the Rail Delivery Group told RTM that government support for the industry is declining and, per journey, is the same or lower than in nine of the last 12 years leading up to privatisation.

“Phenomenal growth in rail journeys is helping train operators to pay £2bn a year back to government, five times more than 15 years ago, with government choosing to reinvest this money in further improving Europe's best network,” he added.

Below is the breakdown of subsidies paid to TOCs in 2013-14. The first figure indicates the total subsidy, figures in parentheses indicate surplus. The second figure is the subsidy per passenger mile, again parentheses indicates surplus:

c2c: £36.5m – 5.6p

Chiltern Railways: £58.6m – 7.9p

CrossCountry: £315.3m – 15.6p

East Coast: (£19.9m) – (0.6p)

East Midlands Trains: £182.2m – 13.1p

First Capital Connect: (£93.7m) – (3.9p)

First Great Western: £230.3m – 6.4p

First TransPennine Express: £173.7m – 16.8p

Greater Anglia: £41.6m – 1.5p

London Midland: £199.2m – 13.6p

Northern Rail: £707.3m – 51.5p

Southeastern: £334.3m – 12.4p

Southern: £17m – 0.6p

South West Trains: £64.1m – 1.7p

Virgin Trains: £180.1m – 4.7p

Tell us what you think – have your say below, or email us directly at opinion@railtechnologymagazine.com

Comments

Jack C   22/08/2014 at 12:48

Northern Rail: £707.3m – 51.5p! I looked at the data and it's £3,300m over the last the last 5 years, consistently bad and suggests nothing is done to fixed this. Surely it is time to right size the rail routes there and get a fairer deal for the taxpayer?

Pedr Jarvis   22/08/2014 at 14:50

Some railways make a profit on current operations. The Ffestiniog Railway Company, the oldest railway company still operating in the world, had in 2013 a profit of about £450K on a turnover of £4.85M. One terminal station has been improved and a second is in line for treatment. New stock rolls out of Boston Lodge Works (which goes back to c.1810). Shares are hard to come by and the profit goes back into the business. The Chairman, Dr John Prideaux, writes of 'excellent earnings per train mile (by main line as well as heritage railway standards)'. Doubtless others will aspire to follow the example.

Angus   22/08/2014 at 21:03

Although the Ffestiniog Railway has a sizeable permanent staff it does rely to a considerable extent on volunteers for both operations and construction - a luxury the commercial operators do not have.

Ray Kennion   23/08/2014 at 09:12

In addition to the voluntary labour issue, you are not comparing like with like. The Ffestiniog infrastructure and rolling stock are built and maintained to different technical standards from those of the UK rail network. Also I wouldn't like to pay Ffestiniog fares for everyday travel. Holiday treat fares are a different animal from your daily commute.

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